Investment Scams Are Getting Smarter-How to Protect Yourself

July 31, 2026 — Sam H. Fawaz

Here’s How Retirees, Active Investors, and Traders Can Stay Protected

Investment scams are more sophisticated, more personalized, and more convincing than ever. Fraudsters now use impersonation, social media, text messages, and even AI-generated content to create trust before they ever mention an investment. The result is a steady stream of investors being drawn into schemes that often end in pump-and-dump losses, frozen accounts, emotional distress, and, in some cases, follow-on recovery scams.

For retirees, the danger is especially serious because the stakes are often long-term savings and income. For active investors, the risk is different but just as real: scammers know how to mimic market language, trading ideas, and “hot” opportunities well enough to sound credible. Traders face another layer of risk because scams often borrow the language of momentum, catalysts, and short-term opportunity.

How these scams begin

Many of today’s investment scams start in a way that seems harmless. You may receive a misdirected text from an unknown number, a friendly message on social media, or an invitation to join an investment group. The message may not even mention investing at first. It may simply ask, “Are you home?” or make another innocent-sounding comment designed to get you to respond.

Once you reply, the scammer begins building a relationship. Over time, the conversation becomes more familiar and more personal. Then, almost naturally, the topic turns to investing. The scammer might mention a relative who trades foreign stocks, a special market opportunity, or a group that shares profitable ideas. The goal is not to make the first message look suspicious. The goal is to create a long enough interaction that trust develops before the pitch arrives.

That trust-building phase is critical. Scammers know that people are far more likely to ignore a warning sign once they feel they know the person on the other end of the conversation. This is why many of these frauds are less about one dramatic lie and more about a slow, carefully managed relationship.

Why retirees are targeted

Retirees are often targeted because they tend to be careful, financially responsible, and interested in protecting capital or generating income. That makes promises of steady returns or “safe” opportunities especially appealing. Fraudsters know how to dress up a pitch so it sounds like a conservative income strategy rather than a speculative gamble.

The language matters. If someone promises guaranteed returns, “risk-free” profits, or unusually consistent gains, that should be treated as a warning sign. No legitimate investment is free of risk, and any claim that something is safe, certain, or protected from loss deserves immediate skepticism.

Retirees can also be more vulnerable to secrecy and urgency. A scammer may say the opportunity is exclusive, limited, or only available for a short time. That kind of pressure is designed to prevent a second opinion from a spouse, adult child, advisor, or friend. The less time you have to think, the more likely you are to act emotionally.

Why active investors need to be careful

Active investors are not immune just because they understand the markets. In fact, scammers often use market language to appear legitimate. They may talk about small-cap stocks, catalysts, foreign issuers, or breakout potential in ways that sound familiar to people who follow the market closely. They may even reference themes like FDA approvals, short squeezes, or momentum moves.

The danger comes when the story becomes more important than the fundamentals. Pump-and-dump schemes typically center on thinly traded stocks that are easy to move with hype. Fraudsters promote the stock aggressively, drive attention and buying interest, then sell their own shares into the strength. Once the promotional pressure fades, the stock can fall sharply and become difficult to exit.

Active investors should also be cautious with social media groups that promise hot tips or “research communities.” These are often just marketing funnels leading people into private chat rooms where the real manipulation happens. If an opportunity is being framed as an inside track or a limited-circle advantage, that is exactly the kind of setup scammers use to create urgency and exclusivity.

A note for traders

Traders can be especially vulnerable because scams often borrow the language and tempo of short-term trading. A message may talk about a breakout setup, a catalyst trade, a pre-news move, or an “early entry” before the crowd finds out. That language sounds familiar to traders, which is exactly why it works.

The danger is that the scam is not really about trade selection. It is about control of the narrative. Fraudsters may tell you which ticker to buy, when to buy it, and even ask for screenshots of your order confirmation so they can keep the story moving. In some cases, they may add you to a chat room with other people who appear to be active traders, creating the illusion of a real trading community.

For traders, the red flags are often behavioral rather than analytical. Be careful if a supposed opportunity requires secrecy, moves exclusively through encrypted apps, or pushes low-liquidity names with a lot of hype and no verifiable research. A real trading idea can withstand scrutiny. A scam depends on speed, emotion, and group pressure.

Traders should also be wary of any “mentor,” signal service, or chat group that claims unusually high consistency with very little drawdown. That is not how real trading works. No one has a perfect system, and anyone promising one is selling something other than market insight.

Social media, impersonation, and AI

One of the most troubling developments is how well scammers now impersonate trusted names. They may use a celebrity face, a well-known market commentator, or a fake representative from a legitimate firm to create instant credibility. The image alone can be enough to lower a person’s guard before the details are examined.

Artificial intelligence has made the problem worse. Scammers can now generate polished messages, remove obvious grammar mistakes, clone voices, and create realistic-looking images or video. That means the old warning signs, like awkward language or obvious typos, are no longer enough by themselves. A scam can now look and sound much more professional than it did a few years ago.

This is why investors should pay more attention to the structure of the pitch than the polish of the presentation. If the message is built around secrecy, urgency, guaranteed returns, or a move to an encrypted app, the presentation quality does not matter. The red flags are already there.

The biggest warning signs

The same warning signs appear again and again across investment scams. The more of these you see, the more cautious you should become.

Watch for:

  • Guaranteed or “risk-free” returns.
  • Pressure to act immediately.
  • Requests to keep the opportunity secret.
  • Unsolicited investment offers.
  • Pushes to move conversations to WhatsApp, Telegram, WeChat, or another encrypted app.
  • Requests for personal information, money, or cryptocurrency before verification.
  • Celebrity endorsements that cannot be confirmed independently.
  • Advance fees to recover money.

If a stranger is pushing an investment, asking for secrecy, and moving the conversation off the platform, that combination alone should stop the process. You do not need to prove it is a scam in order to step away.

How to verify before you act

The best defense is to verify everything independently. Do not use the contact information, link, or phone number contained in the message itself. Go directly to the firm’s website, app, or a trusted database to confirm credentials and contact details.

For financial professionals and firms, check FINRA BrokerCheck, the SEC’s Investment Adviser Public Disclosure database, and your state securities regulator. If the person or firm cannot be verified, or if the details do not match what you were told, treat that as a serious warning.

It is also wise to confirm legitimacy by calling a known number from a statement or official website. If a supposed firm representative asks you to click a link in a text, download a new app, or send sensitive information through an unofficial channel, stop and verify first.

Why talking to someone helps

One of the most effective protections is also one of the simplest: tell someone else before you act. Scam artists depend on emotion, speed, and isolation. They want you to decide quickly and privately. The moment you explain the opportunity to a trusted person, you slow the process down.

That pause is powerful. It gives you time to think more clearly, and it gives someone else a chance to hear what you may be overlooking. Many bad decisions sound reasonable in your own head until you say them out loud.

This matters especially for retirees making decisions about income, capital preservation, or distribution strategy. It also matters for active investors and traders who may feel pressure to move fast on what looks like a market opportunity. Good investing is not just about being informed. It is about having a disciplined process.

What to do if you’ve been targeted

If you suspect a scam, gather documentation immediately. Save messages, screenshots, websites, account details, transaction records, and any names or numbers used in the conversation. If cryptocurrency is involved, preserve wallet addresses and transaction details as well.

Then report it as quickly as possible. Notify your broker or financial institution, the SEC, FINRA, your state securities regulator, and the FBI’s Internet Crime Complaint Center. If money has already been sent, timely reporting may improve the chances of tracing the fraud and helping regulators identify related cases.

Be especially careful with follow-on messages that claim they can help you recover your money. Recovery scams often target people who have already been victimized and are emotionally exhausted. If someone asks for a retainer, processing fee, or other upfront payment to return your funds, that is a major red flag.

Final perspective

The biggest mistake many investors make is assuming scams only work on careless people. In reality, these schemes are designed to exploit normal human reactions: trust, curiosity, urgency, fear, and the desire not to miss out. That is why even experienced retirees, active investors, and traders can be targeted successfully.

The solution is not paranoia. It is a process. Verify independently, slow down, avoid isolation, and never let secrecy or pressure drive an investment decision. If an opportunity is real, it will still be there after you check it carefully.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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SpaceX, Anthropic, and the Danger of IPO Euphoria

June 15, 2026 — Sam H. Fawaz

The SpaceX (symbol: SPCX) initial public offering (IPO) arrived on Friday with historic scale and an equally historic level of enthusiasm. Within hours of listing, the company approached a $2 trillion valuation, placing it among the world’s largest companies almost instantly.

The stock was priced at $135 and closed its first day of trading near $161, a respectable one-day gain of over 19%. By most measures, the launch was a success.

There’s no question that SpaceX is a remarkable business. The combination of Starlink’s recurring revenue, reusable rocket technology, and its expanding ambitions in artificial intelligence and orbital infrastructure makes it one of the most ambitious enterprises ever brought to public markets.

But investors need to separate two things that often get conflated during moments like this: a great company and a great investment at today’s price.

At over 100x sales, the current valuation embeds not just success, but near-perfection.

What You’re Really BuyingForm S-1 is the basic SEC “go public” document that a company must file before an IPO, laying out its business, finances, risks, and how it plans to use the money raised so investors can decide whether to buy the stock.

A closer look at the SpaceX Form S-1 tells a nuanced story. SpaceX today is effectively three businesses layered together:

  • A strong core: Starlink, generating high-margin, recurring revenue
  • A proven enabler: reusable rockets lowering the cost of space access
  • A set of long-dated bets: Artificial Intelligence, orbital data centers, and space commercialization

A reasonable sum-of-the-parts framework might justify a valuation closer to $1–$1.1 trillion, even after applying a generous premium for Elon Musk’s track record. The gap between that and the IPO valuation represents something very important: a priced-in call option on the future of space itself.

Roughly 30–40% of the valuation is tied not to current earnings power, but to outcomes that may take a decade or longer to materialize, if they materialize at all.

That is not speculation in a negative sense, but it is speculation nonetheless.

The IPO Reality: Liquidity Event First

Only about 4% of shares were floated (offered) in the IPO. The rest remain with insiders, employees, and early investors, many of whom are sitting on enormous gains.

This matters.

The IPO is not primarily about funding rockets. It is, in large part, a liquidity event that allows early stakeholders to sell into peak demand. Public investors are stepping in at a point where much of the value creation has already occurred in private markets.

History shows this is rarely where the best risk/reward entry point exists.

Mega-IPOs and Market History

The pattern is consistent:

  • The largest, most anticipated IPOs tend to debut at elevated valuations
  • Early trading is driven by constrained supply and heavy demand
  • Over time, as stock lock-ups expire and supply increases, prices often normalize

Recent IPO examples reinforce this:

  • Rivian: down ~80% from early highs
  • Coupang: down more than 50%
  • Lineage Logistics: Down about 50% within two years
  • Several recent large IPOs are still below listing prices

Even the “winners” like Airbnb and Snowflake have delivered flat-to-negative returns for investors who bought on day one.

In fact, the majority of recent mega-IPOs have traded below their initial listing price within a year.

Even successful long-term companies often struggle after going public. Tesla, for example, went essentially nowhere for years after its IPO before eventually delivering outsized returns. Facebook also traded below its offering price for an extended period before recovering.

This does not mean SpaceX will fail. It means that the entry price matters.

The key takeaway: timing and valuation matter just as much as the quality of the business.

The Supply-Demand Illusion

Early trading in IPOs can be misleading.

With such a small percentage of shares available, supply is artificially constrained. At the same time, demand is amplified by media coverage, retail enthusiasm, and, in some cases, forced buying from index funds. Underwriters have a vested interest in a successful IPO, so they’ll support the stock price by buying shares for the first few days after the IPO.

This imbalance can push prices higher in the short term, but it is not sustainable. As lock-up periods expire and more shares become available, supply increases significantly, often putting downward pressure on prices.

Tesla, SpaceX, and the Merger Question

One of the most discussed topics right now is a potential merger between Tesla and SpaceX.

Based on the Form S-1, there is no indication that such discussions have occurred at the board level. From a legal and disclosure standpoint, that strongly suggests any transaction, if it were ever considered, is likely years away, not imminent.

That said, the relationship between the companies is real and growing:

  • Tesla supplied over $500 million in energy infrastructure to SpaceX’s AI operations
  • Joint initiatives include chip development and AI-driven systems
  • Tesla has already taken a stake in SpaceX

These are meaningful commercial ties, but they do not equate to a pending merger. For now, think strategic partnership, not consolidation.

Index Inclusion: A Hidden Driver

Another overlooked dynamic is how quickly SpaceX could be added to major indexes.

Nasdaq’s new “fast entry” rules could force inclusion into the Nasdaq-100 within weeks, potentially driving billions in passive buying. At the same time, S&P maintains stricter profitability and seasoning requirements, which could delay inclusion there.

This creates a new dynamic:

  • Short-term demand driven by index flows
  • Long-term uncertainty around sustained institutional ownership

It also raises a broader issue: index rules themselves are evolving in response to companies like SpaceX, Anthropic, and OpenAI.

Despite its size, SpaceX is not immediately eligible for inclusion in the S&P 500 index due to profitability and trading history requirements. While some indexes may add it quickly, others will not. That distinction matters, as index inclusion can drive substantial institutional demand.

Investors should not assume automatic or immediate support from passive investment flows.

Sector Classification Matters More Than You Think

The S&P 500 is divided into eleven sectors, each with different “weights” in the index. Where SpaceX ultimately lands, Communication Services, Industrials, or even a revised sector structure, will influence how capital flows into the stock.

  • The Communication Services sector is the most likely home, driven by Starlink
  • The Industrials sector reflects legacy aerospace perception
  • The Technology sector is possible, but would further concentrate an already dominant sector

This is not just academic. Sector placement affects ETF and mutual fund flows, institutional allocations, and ultimately valuation support.

A Broader Message for Upcoming IPOs (Including Anthropic and Open AI)

What we are seeing with SpaceX is not an isolated event. It is part of a broader trend:

  • Larger companies are staying private longer
  • Public investors are gaining access later in the lifecycle
  • Valuations reflecting peak optimism at the point of entry

We are seeing similar enthusiasm building around other potential IPOs, including companies like Anthropic and OpenAI. Anthropic, OpenAI, and other AI-driven IPOs are likely to follow a pattern similar to SpaceX’s.

This is a recurring cycle in the markets. Investors become eager to “get in early” on transformative companies, fearing they may miss the next Amazon or Google. But by the time a company reaches the public markets today, much of the explosive growth has already occurred in private hands.

The public market often receives a more mature company, at a valuation that already reflects high expectations.

The risk is not that these companies are poor businesses. The risk is overpaying at the moment of maximum narrative strength.

A More Disciplined Approach

None of this suggests avoiding these companies altogether. SpaceX may very well be a dominant force for decades. The same could be true for leading AI firms.

However, discipline is critical:

  • Avoid chasing first or second day excitement
  • Let valuations normalize over time
  • Watch how the stock behaves after lock-up periods lapse
  • Focus on risk-adjusted entry points rather than headlines

There is often a far greater opportunity after the initial hype fades and price discovery becomes more grounded.

Final Thought: Patience Over Participation

The most important question is not whether SpaceX succeeds. It very well may.

The question is whether buying into the initial excitement offers a favorable risk/reward tradeoff.

History suggests that it rarely does.

There will likely be a time when SpaceX, or companies like Anthropic, offer compelling entry points. Those opportunities tend to emerge after the hype fades, after supply increases, and after valuations are tested by reality.

Until then, discipline matters more than enthusiasm.

Although the fear of missing out is a powerful motivator, there is another saying in the investing and trading business:

It’s better to be out of a stock and wishing you were in, than being in a stock wishing you were out.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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What’s Going on in the Markets-May 31, 2026

May 31, 2026 — Sam H. Fawaz

It’s the end of May, and stock markets continue to demonstrate remarkable strength. The S&P 500 and Nasdaq indexes both reached record highs on the last trading day of the month (Friday), capping off a powerful May in which major indices gained between 2.5% and 11%. Notably, only Bitcoin and gold declined during the month, and year-to-date, Bitcoin remains the only major asset class down double digits, while bonds are modestly negative.

Since the March 30 intraday low, the S&P 500 index has rallied approximately 20%, marking the strongest nine-week winning streak on record. While last week’s gains were relatively modest, they were sufficient to extend this historic run.

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A Rare and Powerful Rally

This type of sustained advance is uncommon. Since 1950, there have only been 10 similar streaks, and just two in this century. Historically, these periods are often followed by short-term consolidation (sideways movement), typically driven more by marking time and sector rotation than by sharp price declines.

More importantly, forward returns following these streaks, over periods ranging from one month to one year, have generally been positive. These types of environments have not typically marked major market tops or the beginning of bear (downtrending) markets.

That said, it is reasonable to expect a near-term pause, pullback, or correction. After such an extended run, some degree of consolidation would be healthy. This should not be confused with an imminent bear market; longer-term conditions still support higher equity prices, and I expect the indexes will be higher by year’s end.

Liquidity, Artificial Intelligence, and Expanding Opportunity

Several structural forces continue to underpin the market:

  • Artificial intelligence remains a dominant investment theme, driving capital spending, earnings growth, and investor enthusiasm.
  • A wave of high-profile IPOs, including SpaceX and Anthropic, has the potential to attract new capital to public markets.
  • Corporate earnings have broadly exceeded expectations, reinforcing confidence in equity valuations.

At the same time, speculative behavior has re-emerged. Recent trading activity suggests increased risk-taking, with rapid money rotations between stocks and heightened momentum-driven flows. This reflects abundant liquidity but also introduces fragility if sentiment shifts.

The Macroeconomic Backdrop: Mixed Signals

While markets are strong, economic data presents a more nuanced picture:

  • New home sales declined 6.2% month-over-month, with inventory rising to a 9.4-month supply, well above the 4–6-month range considered balanced. Affordability remains a key constraint.
  • Consumer confidence edged lower, with households increasingly reducing discretionary spending and delaying large purchases.
  • Inflation, as measured by the PCE Index (Personal Consumption Expenditures), is re-accelerating. Headline PCE rose to 3.8% year-over-year, while core PCE (which measures the prices U.S. consumers pay for goods and services excluding food and energy) increased to 3.3%, both well above the Federal Reserve’s 2% target.

Consumer sentiment just hit an all-time low of 44.8 in May, with current conditions and future expectations both collapsing to record pessimism.

This is the first time since 1953 that all three (overall, current, and future) sentiment measures have simultaneously set new lows, making today’s mood historically bad. Consumers feel worse about both their present situation and their outlook than at any point in roughly 75 years of data. They’re especially worried about long-run inflation, the rising cost of living, and deteriorating personal finances. If these attitudes lead households to cut back on spending, it could weigh meaningfully on the U.S. economy and, eventually, on stock prices.

These divergences highlight an important principle: the economy and the stock market often move on different timelines. While portions of the economy, particularly lower- and middle-income consumers, are under pressure, corporate earnings and investment, especially in artificial intelligence, remain robust.

The Federal Reserve: No Immediate Safety Net

Markets have, at times, relied on the assumption of a “Federal Reserve Put”, the idea that policymakers will step in to support asset prices during periods of weakness. That assumption is less reliable today.

With inflation still elevated and the labor market relatively stable, the Federal Reserve has limited flexibility to cut rates aggressively. Any expectation of rapid easing may be premature. As a result, markets could be vulnerable to disappointment if policy remains tighter for longer. A small rate hike in the next 12 months would not be surprising if inflation remains sticky.

The new Federal Reserve Chairman, Kevin Warsh, has his work cut out for him.

Oil, Geopolitics, and Expectations

Recent declines in oil prices have supported stocks by easing inflation concerns and lowering yields. Much of this optimism is tied to expectations of a potential U.S.–Iran agreement and increased global energy supplies.

However, markets may have already priced in much of this positive outcome. If oil prices stabilize or decline less than expected, or if geopolitical developments take longer to materialize, equities could face a “sell-the-news” reaction.

The Week Ahead: A Critical Test

The coming week is dense with catalysts and could set the tone for the market’s next phase.

1. May 2026 Monthly Jobs Report (Friday June 5)

Economists expect approximately 90,000 new jobs, with an unemployment rate near 4.3%. Markets are looking for a “Goldilocks” outcome-a strong enough to confirm economic stability, but not so strong that it reignites inflation concerns or pushes interest rates higher.

2. AI Conferences and Commentary

Events such as Computex Taipei, Microsoft Build, and the Snowflake Summit will keep AI at the forefront. Investors will be watching for signs that demand is broadening beyond semiconductors into software, infrastructure, and enterprise applications.

3. Federal Reserve Signals

Federal Reserve speakers and the Beige Book will provide insight into inflation, labor markets, and regional economic conditions. Any shift toward a more hawkish tone could challenge current market optimism.

4. Key Earnings Reports

Companies reporting earnings this week include Broadcom, CrowdStrike, Hewlett Packard Enterprises, Medtronic, Palo Alto Networks, and several major retailers (see below). These results will help determine whether earnings strength is broad-based or still concentrated in a narrow group of leaders.

5. Consumer Health Indicators

Retail earnings and updates, including from Dollar General, Ollie’s, Signet Jewelers, Victoria’s Secret, Macy’s, Ulta Beauty, Five Below, and Lululemon, will offer a clearer picture of consumer behavior. Spending remains intact but increasingly selective.

What Matters Most Now

The market remains in a bullish uptrend, supported by earnings growth, AI-driven investment, and resilient economic activity. However, conditions are becoming more balanced:

  • Valuations are higher.
  • Expectations are elevated.
  • Positioning is more crowded, particularly in technology and AI-related names.

For the rally to continue, incoming data must validate current optimism. That means stable employment, contained interest rates, and continued strength in earnings and AI demand.

Bottom Line

The primary question is no longer whether the market is strong—it clearly is. The more important question is whether it can sustain that strength amid a heavy calendar of economic data, policy signals, and corporate results.

If markets continue to absorb news constructively, maintain leadership, and attract buyers on pullbacks, the path higher remains intact. However, if positive developments trigger selling, or if interest rates rise, it would signal a transition from momentum-driven gains to a period of consolidation.

Investors should be prepared for near-term volatility while recognizing that the broader trend remains quite constructive.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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What’s Going on in the Markets May 17, 2026

May 31, 2026 — Sam H. Fawaz

Editor’s Note: This is a reposting of a video that mysteriously disappeared from May 17 2026.

What’s really driving this stock market surge, and can it keep going? View my short video here.

In this week’s update, I break down the powerful rally we’ve seen since the March 30th lows, with the S&P 500 up 18% and the NASDAQ soaring 28% in just a month and a half. Earnings have been nothing short of impressive, with nearly 90% of companies reporting strong results. But there’s a twist: inflation is starting to creep back up, and that could change the Fed’s next move on interest rates.

I’ll walk you through what this combination of strong earnings and rising inflation means for your portfolio, why I expect some short-term “backing and filling” after this parabolic run, and why I still believe 2026 is shaping up to deliver solid double-digit stock market returns. 

If you want a clear, no-nonsense view of where the market stands right now and where it may be headed next, you’ll find this video worth your time.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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Scam Alert: Don’t Answer the Call or Text

April 12, 2026 — Sam H. Fawaz

Fraudsters are texting fake “Apple Pay fraud alerts” to trick people into authorizing their own transfers—making it almost impossible to recover any lost money.

Forbes reported that Apple is warning iPhone users about a surge in scam calls and texts that impersonate Apple, Apple Support, or Apple Pay security. These messages often claim there’s suspicious activity on your account, a blocked Apple Pay transaction, or a problem that needs “urgent” attention, and then push you to click a link or call a phone number where scammers try to steal passwords, verification codes, or financial details.

Apple’s guidance is simple: if you receive an unexpected call or message claiming to be from Apple, do not answer, do not call back any number in the message, and do not click links or share any codes or passwords. Instead, hang up and contact Apple only through official channels you find yourself (the built‑in Support app, apple.com, or the phone number on Apple’s website), and forward suspicious messages to reportphishing@apple.com.

To reduce the incidence of fake messages reaching your eyes, on your iPhone (sorry, Android users, I’m no help here, but I imagine they’re targeting Google Pay users as well):

1) Go to Settings → Apps → Messages → Unknown Senders and turn on “Screen Unknown Senders”.

2) Enable Filter Spam: Under Text Message Filter, choose Text Message Filter or another spam filtering service you might already subscribe to.

3) Never click suspicious links, even if they look like Apple or your bank/brokerage firm.

4) Keep your iPhone operating system (iOS) up to date to ensure you have the latest security updates: Settings → General → Software Update and turn on Automatic Updates if they’re not already on.

Source: Apple Warns All iPhone Users—Do Not Answer These Calls And Texts-Forbes Article

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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Why You Shouldn’t Trust the Postmark Anymore

March 25, 2026 — Sam H. Fawaz

Starting December 24, 2025, the U.S. Postal Service (USPS) quietly changed how postmarks are applied, and it could mean the difference between an on‑time filing and a late-penalty charge.

Here’s the big change:
A postmark now reflects when your mail is first processed at a USPS facility, not when you dropped it off.

That might sound small, but for tax filings, it could be huge.

The problem: the IRS only looks at the postmark date

Under the IRS’s “mailbox rule,” a document is treated as filed on the postmark date. Historically, you could drop something off at the post office on April 15, get a same‑day postmark, and you were safe.

Now, that’s no longer guaranteed.

In this new system, if your envelope sits in a corner or local box for a day or two before it’s processed, it might get a postmark dated after the tax deadline. And that could trigger penalties, interest, or even missed tax elections, all because of a processing delay you can’t see.

Who should pay attention?

  • Paper filers: Anyone still mailing returns or elections instead of e‑filing.
  • Tax pros and preparers: Especially those mailing extensions, elections, or payment vouchers for clients.
  • Businesses: Certain forms, elections, or claims still require physical mailing.

How to protect yourself

The safest move? Go digital whenever possible. But if you must mail something close to a deadline, here’s what to do:

  • Avoid collection boxes near filing deadlines. They might not get processed for a day or more.
  • Skip self‑service or metered labels: They don’t count as official postmarks.
  • Mail from a retail USPS counter and watch it get stamp‑dated before your eyes.
  • Request proof of mailing, such as:
    • A postage validation imprint (PVI) from the retail counter
    • A manual hand‑stamped postmark
    • Registered or certified mail service

For those who prefer the official text, you can read the USPS guidance here, but the takeaway is simple: don’t wait until the last minute to mail tax documents. The “postmark rule” isn’t as forgiving as it used to be.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

Posted in Financial Planning, tax planning, Taxes. Tags: , , , , . Leave a Comment »

No Paper, Only Plastic or Digital: Welcome to Tax Filing Season 2026

February 28, 2026 — Sam H. Fawaz

I can’t believe it’s here again—the hustle and bustle of the 2025 tax filing season.

Didn’t we just finish filing 2024 returns and 2025 tax planning?

What’s new

The One Big Beautiful Bill Act, signed into law in July 2025, made several changes taxpayers may want to be aware of when preparing their returns, including these:

· New deductions for tip income and overtime pay are available: up to $25,000 for qualified tips and up to $12,500 ($25,000 if married filing jointly) for overtime, both with income limits.

· A new $6,000 senior deduction is available for taxpayers 65 and older ($12,000 if both taxpayers are 65 and older and married filing jointly), with income limits.

· The Child Tax Credit has been increased to $2,200 per qualifying child.

· The State and Local Tax deduction cap increased to $40,000 for most filers, though this benefit begins to phase out for individuals with a modified adjusted gross income (MAGI) over $500,000.

· New deduction for interest on loans for qualifying new vehicles with final assembly in the U.S., for purchases made in 2025–2028.

· Starting in 2026, a new above‑the‑line charitable deduction up to $2,000 for cash gifts to qualifying charities, available even if you don’t itemize, subject to income limits.

Tips to make filing easier

To speed a potential tax refund and help with tax filing, the IRS suggests the following:

· Make sure you have received Form W-2 and other earnings information, such as Forms 1099, from employers and payers before heading to your favorite tax preparer or starting self-preparation.

The dates for furnishing such information to recipients vary by form, but they are generally not required before February 1, 2026. You may need to allow additional time for mail delivery.

Some brokerage 1099s may not be available until sometime in March, and Schedule K-1s for partnership, S corporation, and trust beneficiaries may be furnished close to or after the deadline (which may require an extension to file).

· Go to irs.gov to find Form 1040 or Form 1040-SR (available for seniors born before January 2, 1960), and their instructions.

· File electronically and use direct deposit or direct debit.

· Request an extension of time to file rather than rush through preparation. An extension of time to file does not extend the time to pay, so you must estimate your liability and send it in with your extension.

· Consider whether the cost of professional tax preparation, in light of many new and confusing tax provisions, is in your best interest. Professional tax preparation is recommended for anything but the simplest returns and often pays for itself in mistakes avoided, time, and tax savings, and frustration.

· Check irs.gov for the latest tax information.

Key filing dates

Here are several important dates to keep in mind:

· January 9. IRS Free File opened. IRS Free File Guided Tax Software, available only at irs.gov/freefile, allows participating software companies to accept completed 2025 tax returns from any taxpayer or family with an adjusted gross income (AGI) of $89,000 or less and electronically file the returns with the IRS.

On January 26, Free File Fillable Forms became available to taxpayers with an AGI above $89,000 to fill out and e-file themselves at no cost.

· January 26. The IRS began accepting and processing individual tax returns.

· April 15. The deadline to file 2025 federal income tax returns (or request an extension) arrives for most taxpayers. If you’re required to make quarterly estimated income tax payments, your 1st quarter 2026 estimated payment is also due (some state tax payment due dates vary slightly from federal due dates).

· June 15 and September 15. These are the due dates for the 2nd- and 3rd-quarter 2026 federal estimated income tax payments. These payments are due even if your 2025 tax return is on extension and has not yet been filed.

· October 15. This is the federal filing deadline for those who requested an extension on their 2025 tax returns.

January 15, 2027. This is the due date for the 4th quarter 2026 federal estimated income tax payment.

Tax refunds

The IRS encourages taxpayers seeking a tax refund to file their tax return as soon as possible. The IRS expects to issue most tax refunds within 21 days of receiving a tax return. That’s true only if:

(1) the return is filed electronically,
(2) the tax refund is delivered via direct deposit and,
(3) there are no issues with the tax return.

To minimize processing delays, the IRS encourages people to avoid paper tax returns whenever possible.

Paper Tax Refund Checks Being Phased Out by the IRS

As part of a broader U.S. Department of the Treasury initiative to transition to fully electronic federal payments, the IRS is phasing out paper tax refund checks for individual taxpayers beginning with the 2026 federal tax filing season and is also reducing reliance on paper checks paid to the IRS in favor of electronic payment options.

Why is the IRS making this change?

The move towards electronic payments is designed to protect taxpayers from the possibility of a paper refund check being lost, stolen, altered, delayed, or returned to the IRS as undeliverable. Electronic refunds (and payments) are also more cost-efficient and faster than non-electronic payments, which can take six weeks or longer to process.

What does this mean for taxpayers?

No changes are being made to the process of filing a tax return. Taxpayers should continue to file their tax returns as they normally would, using one of the existing filing options. However, the shift in refund delivery will be towards electronic payment methods. As a result, taxpayers should have all of their banking information (e.g., account and routing numbers) readily available when filing their returns.

While most tax refunds will be delivered by direct deposit or other secure electronic methods, alternative options, such as prepaid debit cards or digital wallets, will still be available for taxpayers without a bank account.

So plastic? Yes. Paper? No.

What if I owe the IRS money?

The IRS has stated that taxpayers should continue to use existing payment options until further notice, but is strongly encouraging individuals and businesses to use electronic payment options, since they are easier, faster, and more secure. Further IRS guidance is expected soon.

The IRS offers the following electronic payment options:

  • IRS Direct Pay, which lets you pay the IRS directly from your bank account without fees
  • Electronic Federal Tax Payment System (EFTPS), a free system offered by the U.S. Department of the Treasury to pay your federal taxes (only if you’re already enrolled; new enrollments were suspended as of October 17, 2025)
  • IRS2Go, an IRS mobile app that allows you to make secure mobile payments using Direct Pay or card-based options
  • Debit card, credit card, or digital wallet payments made through IRS‑approved third‑party processors (convenience fees may apply)

For more information on the IRS transition towards electronic payments, visit modernizing payments.

After all that, the bottom line is simple: in a world where the IRS is going plastic, Congress is handing out “One Big Beautiful” goodies, and paper checks are going the way of carbon paper, the smartest move you can make this filing season is to stay organized, think electronic, and, when in doubt, let a tax pro lose sleep so you don’t have to.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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Mandatory Roth Catch-Up Contributions Begin in 2026

January 31, 2026 — Sam H. Fawaz

For nearly a quarter century, employers have offered their retirement savings plan participants age 50 and older a valuable opportunity: the chance to make additional catch-up contributions to their plans.¹

Thanks to the SECURE 2.0 Act passed in 2022, that opportunity became even more valuable: Employers may now allow plan participants aged 60 to 63 to contribute more than their other catch-up-eligible peers through “super catch-ups.”

In 2025, the standard plan contribution limit was $23,500. Participants ages 50 to 59 and 64 and older in 2025 can contribute an additional $7,500, while those ages 60 to 63 can contribute an additional $11,250.

However, SECURE 2.0 also included a provision requiring catch-up contributions to be made on a Roth basis for certain high-earning employees. In September 2025, the IRS issued final regulations on these mandatory Roth catch-ups, which will take effect this year.

The Big Picture

In most work-based savings plans, employees can make catch-up contributions and contribute on both a pre-tax and a Roth after-tax basis.² While pre-tax contributions reduce the proportion of a participant’s paycheck that is subject to current income taxes, Roth contributions allow participants to potentially build a tax-free nest egg for the future. Withdrawals from Roth accounts made after the account owner reaches age 59½ are tax-free, provided the account has been held for at least five years; other exceptions apply.

Pre-tax contributions can be especially appealing to high earners, who may contribute as much as possible (up to plan limits) to maximize the opportunity to reduce current taxable income.

However, pre-tax contributions also reduce federal tax revenue. That may be why legislators included a provision in SECURE 2.0 requiring catch-up contributions for those earning more than $145,000 to be made on a Roth (post-tax), rather than a pre-tax basis. Initially slated to take effect in 2024, that provision was delayed until 2026 to allow the IRS to finalize rules and employers to modify their systems and plan documentation accordingly.³

The Details

In September 2025, the IRS issued final regulations stating that the new requirements generally apply to contributions in taxable years beginning after December 31, 2026. The IRS further stated, “The final regulations also permit plans to implement the Roth catch-up requirement for taxable years beginning before 2027 using a reasonable, good faith interpretation of statutory provisions.”⁴ Many industry observers interpret this language to mean that employers will be expected to begin implementing the new provisions in 2026.⁵ ⁷

To determine whether an employee exceeds the $145,000 threshold, employers will use Federal Insurance Contributions Act (FICA) wages listed in box 3 of the employee’s W-2 form from the previous year. In other words, to comply in 2026, employers will use 2025 W-2 forms. The rule does not apply to those who do not have prior-year W-2 wages, such as the self-employed.⁶ ⁸

The new rule applies to standard and super catch-ups in 401(k), 403(b), and 457(b) plans; however, the new Roth mandate does not apply to SIMPLE plans or the special catch-up contributions permitted in 403(b) and 457(b) plans. Plans that do not offer Roth contributions must either add a Roth feature or disallow high earners from making catch-up contributions.⁷ ⁹ ¹¹

Tax and Retirement-Savings Impacts

High earners who may be subject to the new rule might want to review their tax-planning and retirement-savings strategies soon. Although Roth contributions can provide substantial tax benefits in the future, eliminating the pre-tax catch-up contribution could have a surprising impact on income tax planning during the 2026 tax-filing season.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

1) CNBC, January 4, 2017
2) PLANADVISER, October 1, 2025
3) IRS Notice 2023-62
4) IRS, September 15, 2025
5) Society for Human Resource Management, accessed October 2, 2025
6, 8) Plan Sponsor Council of America, September 30, 2025
7, 9, 10) Slott Report, September 22, 2025
11) ADP SPARK blog, accessed October 2, 2025

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New Year, New Account: How the 2026 Kids’ IRA Could Jump‑Start Your Child’s Retirement Savings

December 31, 2025 — Sam H. Fawaz

Beginning in 2026, a new type of tax-advantaged account for children, informally called “Trump accounts”, will become available. These are a special version of traditional IRAs designed to give kids an early head start on long-term retirement investing, with seed money from the federal government and, in some cases, additional funding from private donors.

Important: Rules are new and still evolving. Final forms, portals, and implementation details may change before these accounts launch. This overview is for general information only and is not personal tax or investment advice.

What is a Trump Account?

  • A Trump account is essentially a traditional IRA for a child under age 18 who has a Social Security number.
  • The accounts were created under the federal “One Big Beautiful Bill” and will take effect for tax years beginning in 2026.
  • Although they follow many of the same tax rules as traditional IRAs, there are essential differences in who can contribute, how the accounts are funded, and how distributions work.

Who is Eligible and How Do You Opt In?

  • Each eligible child must be opted in by a parent or guardian; accounts are not automatically created.
  • The U.S. Treasury will set up the basic account framework for each eligible child, but parents must actively open/activate the account.
  • To opt in, parents will either:
    • File new Form 4547, or
    • Enroll through a federal online portal once it is available.
  • As of now, only a draft Form 4547 has been released, and the online portal is not expected to be available until mid‑2026.

Government and Private “Seed” Contributions

Trump accounts are unusual because they can receive funding from multiple sources, including the federal government and specific qualifying organizations.

$1,000 federal contribution:

  • The federal government will contribute $1,000 to each Trump account opened for children born after 2024 and before 2029.
  • Parents must opt in (via Form 4547 or the portal) to receive this contribution.
  • Additional $250 for lower‑income ZIP codes:
    • Michael and Susan Dell have pledged $6.25 billion to fund additional contributions for 25 million children ages 0-10 who live in ZIP codes with a median income below $150,000.
    • Eligible children in those areas will receive an additional $250 in their Trump accounts.
  • These government and qualifying organizational contributions:
    • Are not taxable to the child.
    • Don’t create a cost basis in the account (they are treated more like pre‑tax contributions inside a traditional IRA for tax purposes).

How Much Can Be Contributed Each Year?

In addition to the federal and qualifying “general” contributions, families and employers can add their own money:

  • Up to $5,000 per year can be contributed to a child’s Trump account until the child turns 18.
    • This annual limit applies to all contributions combined (parents, relatives, employers, etc.).
    • The $5,000 limit will be indexed for inflation each year after 2027.
  • Of that $5,000 annual limit, up to $2,500 may be contributed tax‑free by an employer of either the parent or the child (if the child has a job).
  • Contributions can be made by:
    • Parents or guardians.
    • Grandparents or other relatives.
    • Other individuals who wish to help fund the account.
  • Key tax point:
    • No one gets an income tax deduction for contributing to a Trump account.
    • Qualified general contributions by governments or 501(c)(3)s, employer contributions, and the federal $1,000 contribution do not create a cost basis in the account.
  • Timing restriction: Contributions cannot begin before July 4, 2026.

Investment Rules and Distribution Basics

These accounts are intended to be long‑term, stock‑based retirement-savings vehicles for children.

Investment options (before age 18)

  • Until the child turns 18, Trump account funds may be invested only in:
    • Certain stock mutual funds, or
    • Exchange‑traded funds (ETFs) that track an index of primarily U.S. companies (for example, an S&P 500 index fund).
  • The goal is to keep investment choices simple, diversified, and aligned with long‑term growth.

Withdrawals and taxes

  • Before age 18:
    • Distributions are generally not allowed while the beneficiary is under 18, with limited exceptions to be clarified in regulations.
  • Starting at age 18:
    • Once the beneficiary reaches 18, distributions are taxed similarly to a traditional IRA:
      • Withdrawals that represent cost basis (after‑tax contributions) are generally not taxable.
      • Withdrawals of earnings (growth, income, and pre‑tax contributions) are taxable as ordinary income in the year withdrawn.
    • Before age 59½, taxable portions of distributions may also be subject to a 10% early distribution penalty, unless an exception applies (e.g., certain education expenses, first‑time home purchase, or other qualifying events under IRA rules).

Rollovers

  • A Trump account may be rolled over, in or after the year the beneficiary turns 18, to:
    • A traditional IRA for the same beneficiary, or
    • Certain other qualifying retirement accounts (subject to future guidance).
  • This allows the account to transition into the standard retirement system once the child is an adult.

Planning Considerations for Families

For many families, especially those who do not currently max out other tax‑advantaged plans, Trump accounts may offer:

  • A federally funded start for a child’s retirement savings.
  • A structured way for parents, grandparents, and employers to add to long‑term savings.
  • Investment in low‑cost, diversified stock index funds with decades to grow.

At the same time, because:

  • Contributions are not deductible,
  • Investment choices are restricted before age 18, and
  • Rules around basis, taxation, and penalties mirror traditional IRA rules,

it will be essential to coordinate any Trump account funding with your broader retirement and education planning, as well as with Roth IRAs, 529 plans, and regular taxable accounts.

Kids’ IRA or UTMA/UGMA Account?

Some leading financial planners have noted that Trump accounts may not always be the best way to save for children.

One key critique is that while these accounts offer tax deferral, they do not provide tax‑free growth as a Roth IRA does. Instead, contributions are after‑tax, and much of the growth is eventually taxed as ordinary income when withdrawn in adulthood, similar to a non‑deductible traditional IRA.

By contrast, a simple taxable custodial account (UGMA/UTMA) can often take advantage of the kiddie tax and favorable long‑term capital gains rates, allowing families to realize gains periodically at low or even 0% tax rates and to step up basis over time. This can leave the child with more after‑tax wealth than a Trump account, even if the account values look similar on paper.​

Advisors also note that flexibility favors traditional custodial accounts.

UGMA/UTMA assets can be used for a wide range of goals once the child reaches majority: education, starting a business, a first home, or other needs, without early‑withdrawal penalties.

Trump accounts, on the other hand, are subject to retirement‑style rules: access is constrained, withdrawals before age 59½ can trigger penalties, and distributions are generally taxed as ordinary income.

Taken together, the ordinary‑income taxation, lack of a true tax‑free “Roth‑like” benefit, and tighter withdrawal rules are why some experts still prefer straightforward taxable custodial accounts as the primary savings vehicle for many families, using Trump accounts (if at all) as a supplemental tool rather than the core strategy.​

Get in touch with us if you’d like help evaluating whether a Trump account makes sense for your family and how it fits with your existing financial planning. The next step is to review your situation and your current saving priorities.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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Understanding Invesco’s Aggressive QQQ Proxy Push

November 12, 2025 — Sam H. Fawaz

Several clients have written to me inquiring about the barrage of calls, emails, and messages from Invesco regarding the ETF QQQ’s push to gather proxy votes. Here’s an excerpt of one client’s question and my response (greatly expanded for this article):

“…not the most consequential message you’ll receive this year, but my curiosity has been piqued … by the campaign from Invesco QQQ to cast a proxy vote. I’ve never seen anything like it – the mailings, the calls, and so on – for a process that, in my experience, has always been ultra-routine and pretty meaningless for someone like me. Can you explain, and do you have any advice?”

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Here’s how I responded

Regarding the campaign, you’re not alone. Many clients have noticed the unusually intense campaign from Invesco regarding the proxy vote for Invesco QQQ, and you’re right that it stands out from what’s usually a routine process for most fund shareholders.

Early on, my business partner suggested that I write and send an email to clients about this. Not realizing the intensity of Invesco’s push, I decided we didn’t need to, which turned out to be a mistake. In all my years in the business, I’ve never seen or heard of any company launching such an intense and aggressive proxy gathering campaign.

Here’s what’s really going on

Invesco is proposing to convert the ETF QQQ from its current structure (a unit investment trust, which dates back to the earliest ETFs) into a modern, open-ended exchange-traded fund. The primary rationale is to enhance flexibility, oversight, and reduce costs. Specifically, if shareholders approve, the QQQ expense ratio would decrease by 10% (from 0.20% to 0.18%), resulting in tens of millions of dollars in yearly savings across the fund. Importantly, this change won’t impact QQQ’s strategy, holdings, or tax characteristics, nor will it change the fund’s manager or its index-tracking approach.

The reason you’ve gotten multiple mailings and calls? Invesco requires a high level of shareholder participation: by law, converting QQQ’s trust structure requires more than half of all shares to be actively voted “yes.” Unlike typical votes where non-responses are ignored, in this case, non-votes count as “no” votes—which is why the fund is spending so much to encourage participation and obtain a quorum. With so many retail investors holding QQQ, this is a true logistical challenge.

Details of the push

  • Three separate proposals must all pass: shareholders are voting on three linked items: conversion from a unit investment trust to an open-ended ETF, associated changes to the management/advisory structure, and the creation of a board of directors. If any proposal fails, none of the changes will be implemented.​
  • Non-votes count as “No” votes: Unlike routine proxy votes, shareholders who do not respond are counted against the proposals, making high participation essential.​
  • Shareholder benefits include:
    • Lower expense ratio (from 0.20% to 0.18%, estimated savings ~$70 million/year).​
    • Enhanced governance via a new board overseeing the fund for the first time; greater reporting and transparency, including summary prospectuses and semi-annual reports.​
  • No change to investment objective, index, or tax treatment: The fund will continue to track the Nasdaq-100® Index. The conversion is a tax-free event for shareholders.​
  • Huge outreach effort: Invesco is spending an estimated $40 million on proxy solicitation to ensure quorum, highlighting the unusual scale and importance of this campaign.​
  • Record date: August 15, 2025. Only shareholders of record as of this date are eligible to vote.​
  • If approved, conversion is likely to happen by year-end or early 2026.

Potential downsides of shareholder approval

  • Increased Operational Flexibility Means More Managerial Discretion: The move to an open-ended fund structure allows Invesco and its new board greater latitude in making changes, such as fee adjustments or introducing derivatives, that previously required more restrictive oversight under the unit investment trust (UIT) format. This future flexibility depends on the intentions and discipline of the board and managers, and could shift if there’s turnover in leadership.​
  • Invesco Begins Collecting Direct Management Fees: The new format allows Invesco to collect a “unitary management fee” that the trust structure previously didn’t permit. This creates an incentive to grow profits and, potentially, alter expenses down the line, despite the initial fee reduction.​
  • Board Compensation and Governance Costs: A nine-member board will be introduced, which adds an additional cost layer (director compensation and overhead) that could offset some savings or shift incentives compared to a strictly trustee-based approach.​
  • Liquidity Risk in Market Downturns: Open-ended funds may be forced to sell portfolio assets at unfavorable prices if a large number of investors redeem shares during periods of stress, potentially impacting performance. The UIT structure allows shares to trade among investors without requiring the sale of underlying assets, a mechanism that some investors value for stability during volatile times.​
  • Shareholder Risk in Securities Lending: Invesco may expand its securities lending activities under the new structure, and any resulting risks or losses would be borne directly by shareholders, not by Invesco.​
  • No Guarantee Future Fees Will Remain Lower: While initial projections indicate a 10% reduction in the expense ratio, future changes to fee schedules are possible under the new open-ended structure, subject to board approval.​

While many see these risks as manageable, they should be evaluated alongside the promised benefits. It’s important for shareholders to understand both sides before casting a vote.

What major institutional holders think

Major institutions that hold QQQ have generally leaned in support of the conversion vote, viewing the restructuring as beneficial for both operational efficiency and cost reduction. However, the fund has an unusually large retail investor base, making institutional votes influential but insufficient to guarantee passage, which is why Invesco has mounted such an aggressive campaign.​

  • Institutional Sentiment: Proxy advisory firms and ETF strategists have publicly supported the move, highlighting reduced expense ratios, improved governance via a new board, and enhanced transparency as positives for shareholders. Major institutional holders—including major brokerage platforms, asset managers, and pension funds—are widely expected to vote in favor due to these clear-cut advantages, as their own portfolios will directly benefit from fee savings.​
  • Voting Weight: Institutions typically vote their shares, but approximately 40–50% of QQQ ownership is held by retail investors, and a majority of the outstanding shares must vote “yes” for the conversion to occur.​
  • No Institutional Opposition Spotted: As of now, there is no reported campaign of institutional opposition to the change; the proposal is seen industry-wide as a modernization step that aligns QQQ with other large ETFs.

What I think

This change appears to be designed to benefit shareholders by offering lower costs and greater transparency. Despite the potential downsides, it is unlikely to introduce major surprises or large additional risks.

If you agree, I’d suggest voting in favor; however, you won’t be at any disadvantage if you simply ignore the campaign—the fund will continue regardless. Invesco’s push is simply a matter of meeting the voting threshold they need.

Timing of the vote postponed

The original QQQ conversion proxy vote was scheduled for October 24, 2025. After failing to reach a quorum at the original meeting, the vote was postponed to December 5, 2025.

It sounds like the phone calls, emails, snail mail, and text messages will continue for a few more weeks. Or as they say, “the beatings will continue until morale improves.” Maybe casting your vote will stop all the messages. In any case, it’s worth a try.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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